ESG reporting refers to the disclosure of data covering the company’s operations in environmental, social, and corporate governance. According to financial firm Morningstar, the number of public companies publishing such reports grew from fewer than 20 in the early 1990s to more than 10,000 companies today, and about 90% of the Fortune Global 500 have set carbon emission targets, up from 30% in 2009.
Consulting firm PwC reports that ESG reports enable companies to be more transparent about the risks and opportunities they face.
Many of these reports incorporate reverse logistics goals and data to present and report a circular view. For example, Reverse Logistics Association (RLA) member Best Buy’s 2022 ESG report noted that it repaired more than 1.7 million devices in FY22, keeping products in the “use” phase. Best Buy also highlighted its trade-in program, which resells products in good working condition. Items include phones, laptops, tablets, cameras, smartwatches, and video game consoles. In FY22, customers traded in more than 650,000 devices, and collectively over two million pounds found a “second life” through trade-in and repair programs.
Another RLA member, Amazon, noted in its ESG report that its Product Lifecycle Support (PLS) programs helped avoid 7.5 million returned units in the US and Europe in 2022. These programs include original equipment manufacturer (OEM) support and OEM repair, where customers can go straight to the manufacturer for support, and parts replacement, where customers can request available components to replace damaged or missing parts, free of charge. In addition, in 2022, 31% of units in Europe and 29% of units in the US that could not be resold as “new” were relisted on Amazon Warehouse, an online platform that resells used and open-boxed items. Also, a global warehouse damage-reduction plan resulted in an eight percent decrease in damaged items worldwide in 2022.
While not required yet, many companies are incorporating these ESG reports into their financial filings. The US Securities and Exchange Commission (SEC) is expected to adopt final rules requiring detailed disclosure by companies of climate-related risks and opportunities by the end of 2023. However, developing and passing standards and uniform measurement methods may take longer. Currently, there are US government hearings on potential SEC ESG rules. However, the National American Manufacturing Association has pushed back on the hearings in a letter, “The SEC has proposed prescriptive, inflexible ESG mandates that will dramatically increase costs for manufacturers while providing minimal benefit for investors.”
Regardless of any potential government delays, more companies are embracing ESG reports. Uniform measurement methods will be required, so that good data will be necessary. As a result, companies can measure relevant KPIs such as return volumes and costs, provide insight into potential investments, and build a loyal customer base that can drive sales.
Similarly, the Reverse Logistics Association’s Standards Committee is working on several projects, including benchmarking, 12N SmartQR Labels, and more. To find out more, visit RLA.org.
Tony Sciarrotta is the Executive Director of the Reverse Logistics Association.
This article originally appeared in the September/October, 2023 issue of PARCEL.